What is a Channel Partner Program?

Channel partner programs are strategic alliances companies forge with other types of channel partners including: resellers, distributors, service partners, or independent software vendors (ISVs). By leveraging this network's combined strengths and market reach, companies can significantly expand their sales potential and access new markets.

These programs aren't one-sided (or at least shouldn’t be). Companies typically offer extensive training, resources, and financial incentives to support partners. 

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Why are Channel Partner Programs so Important?

According to McKinsey, one-third of global GDP, which amounts to $80 trillion in potential revenue will be driven by ecosystems – interconnected networks of organisations across diverse sectors. 

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“This is the single largest economic transformation in the history of the planet. For ten thousand years, everything—the whole economy—was organised across traditional industry lines, and now it’s breaking up. It’s getting reorganised across customer needs.”

Credit: Miklós Dietz

This era marks a fascinating, yet critical, juncture for companies worldwide. Traditional business models are undergoing a shift, forcing a fundamental rethink of how companies operate and strategise. The confluence of factors, including the digital surge spurred by COVID-19, has brought us to a tipping point. Leading figures across industries are actively exploring the power of ecosystems, platforms, and cross-industry value creation. One of the industries investing heavily in partner networks is the technology sector. What we see is that it’s not a passing trend, but a critical mass moment demanding a proactive response. 

One of the responses to partnering up and creating ‘stickiness’ is to bring channel partner programs at a larger scale. These, if well-designed, aim to offer the benefits of multiplier effect: for all parties involved.

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Why Use a Channel Partner Program?

The benefits of a well-structured program are numerous:

Market Expansion & Potential Sales Increase

Partners bring established relationships and expertise, helping you reach new customer segments and geographical markets. Partners leverage their sales networks and industry knowledge to generate leads and convert them into paying customers.

Enhanced Expertise

Partners can provide additional services like installation, configuration, and ongoing support, taking the burden off your team.

Cost-Effectiveness

Expanding your reach through partners can be more cost-efficient than building your own sales and support infrastructure.

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How to Build a Successful Channel Partner Program?

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#1. Define Measurable Goals and Identify Target Partners

Before embarking on this journey, take a strategic pause to solidify your program's objectives and answer these questions:

• Are you aiming to expand market share? 
• Do you want to penetrate new customer segments?
• Are you looking to bolster sales in specific regions? 

This is an important step, because clearly articulated goals will guide you through identifying partner types to look for. It is suggested to conduct a thorough research to pinpoint potential partners with established customer bases that demonstrably complement your target audience.

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#2. Craft a Compelling Value Proposition

Why should businesses partner with you? 

Before you even think about recruiting partners, lock down a compelling answer to this question: "What's in it for ME?" This is the top priority for most (if not all) potential partners. A clear value proposition that meticulously highlights the tangible benefits for your partners. Think attractive margins, access to comprehensive marketing resources, ongoing training programs, and dedicated sales support. But remember, a one-size-fits-all approach won't work.

To create a thriving ecosystem, tailor your value proposition to resonate with different partner types and address their specific needs and motivations. Here's how you can cater your offerings:

Profit-Driven Partners

Incentivise sales by providing attractive commission structures, rebates, or co-op marketing funds. This directly impacts their bottom line and fosters a results-oriented partnership.

Growth-Focused Partners

Equip them with the tools they need to accelerate their own success. Offer comprehensive training programs to deepen their product knowledge, co-branded marketing materials to amplify their reach, and lead generation tools to streamline their sales pipeline.

Technical Partners

Invest in their expertise through in-depth product training, access to dedicated support resources, and dedicated account managers. This empowers them to confidently address customer inquiries and provide exceptional technical service, ultimately enhancing your brand reputation.

By demonstrating a clear understanding of their goals, you'll attract partners who are genuinely invested in your program's success. 

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#3. Design a Flexible Tiered Program

Consider creating a tiered program with varying levels of commitment and corresponding benefits. Lower tiers can function as gateways to attract new partners, while upper tiers reward top performers with exclusive incentives like co-branding opportunities or priority support. This tiered structure motivates partners to strive for higher levels of engagement and performance.

Traditionally, B2B channel partner programs have relied on a one-size-fits-all approach. However, in today's competitive industry, a flexible tiered program can foster loyalty and "stickiness" by catering to the diverse needs and capabilities of your partners. 

Each tier should offer a distinct set of benefits to incentivize participation and progression. This could include:

• Increased commission rates for higher tiers
• Priority access to new product information and training for higher tiers
• Co-branding opportunities and marketing support for higher tiers.
• Dedicated account management for higher tiers

Partners should clearly understand the criteria for moving between tiers. Set attainable goals based on performance metrics relevant to their tier. This motivates partners to strive for higher levels of engagement. While financial rewards are important, consider non-monetary incentives to create a sense of exclusivity and recognition. Examples include:

• Partner awards and recognition programs
• Early access to beta testing opportunities
• Invitations to exclusive industry events

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#4. Streamline Partner Onboarding and Enablement

The onboarding process sets the foundational tone for the entire partnership. Ensure it's efficient and informative, providing comprehensive training materials on your products, sales methodologies, and readily available support resources. 

Utilise online portals, interactive training modules, and dedicated onboarding specialists to equip partners with the knowledge and tools they need to succeed from the outset.

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#5. Foster Open Communication and Collaborative Relationships

Regular communication is the lifeblood of a thriving channel program. Establish clear communication channels and maintain open dialogue with your partners. Host periodic meetings, webinars, or create a dedicated online forum to foster knowledge sharing, address concerns promptly, and celebrate successes collaboratively.

Here are some ways to create a truly interactive partner environment and deliver an impeccable partner experience:

Centralise communication 

Invest in a partner collaboration platform, essentially a one-stop shop for everything related to your program. This keeps information flowing freely and readily accessible.

Interactive learning

Ditch the static presentations and offer engaging webinars. Personalised communication through dedicated account managers adds another layer of support.

Regular check-ins 

Schedule daily syncs or weekly meetings to keep the momentum going. These can be quick bursts of information exchange to stay aligned.

Real-time idea exchange

Embrace open communication! Utilise a Kanban board or similar tool where partners can share ideas, concerns, and insights in real-time. This fosters collaboration and problem-solving.

Seamless lead sharing

Maximise partner success by integrating your CRM with the collaboration platform. This provides valuable insights into their performance and streamlines lead sharing.

Automated lead routing: Ensure timely lead distribution with automated routing and notifications. No more dropped leads or missed opportunities!

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#6. Empower Partners with Marketing and Sales Tools

Equip partners with the resources they need to effectively market and sell your products. This might include co-branded marketing materials, lead generation tools, product demos tailored for specific audiences, and comprehensive sales training programs. 

Consider a Partner Marketing Development Fund (MDF) to support co-marketing initiatives and incentivize partner-driven marketing efforts. Partner marketing is a crucial part of your marketing when you’re planning on growing the Channel Partner Program. Check out this article to explore how you can leverage your partner marketing activities.

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#7. Implement a Transparent Incentive Structure

A well-defined incentive program motivates partners to actively promote your products. There are various structures to consider: commissions based on sales volume, tiered rewards based on performance metrics, or a strategic combination of both. Ensure clear communication of the incentive structure, including how partners can effortlessly track their progress and earn rewards.

There are several structures to consider when designing your incentive program:

Commission-based rewards

This classic approach directly links partner success to sales volume. Higher sales equal higher commissions, creating a clear incentive to sell.

Tiered rewards based on performance metrics

This structure rewards partners based on a combination of factors, such as achieving marketing goals, exceeding customer satisfaction benchmarks, or completing product training. This encourages a more holistic approach to partnership success.

Strategic combination

Why not have the best of both worlds? A strategic combination of commissions and tiered rewards can be highly effective. This caters to different partner motivations while ensuring a well-rounded approach to product promotion.

Last but not least, keep in mind that the most well-designed incentive program is only effective if partners understand it. Ensure to keep the rules easy to follow and don’t change things up once you get your buy-in. 

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#8. Leverage Partner Collaboration Platform (or similar tools)

Technology can significantly streamline program management. 

Investing in robust PCP software that automates routine tasks, tracks partner performance meticulously, manages incentives effectively, and facilitates seamless communication will do most of the heavy lifting. Make sure you have the right tools to engage and activate your partner network, rather than offering traditional outdated PRM systems. 

Having it all automated in one easy-to-use tool, frees up your team's valuable time to focus on strategic initiatives and focusing on partner relationships (something that software might not be able to fully facilitate yet).

Some of the repetitive tasks that eat up valuable time that could be easily automated:

Generating and distributing reports

PCP can track key performance metrics (KPIs) like partner sales, marketing campaign engagement, and customer satisfaction providing real-time insights into your program's health.

Managing incentives and commissions

No more spreadsheets and complex calculations. PCP software automates incentive calculations, tracks partner progress towards rewards, and streamlines payouts. This ensures timely recognition and keeps partners motivated.

Streamlining communication and collaboration

PCP provides a central platform for seamless communication between your team and partners. Partners can access program updates, training materials, and marketing assets in one platform rather than logging into 200+ partner portals (that’s often the number of systems partners managers have to monitor).

Partner Collaboration software isn't just about automation or partner management, it's about creating a foundation for streamlined processes, workflows and better decision making. 

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Beyond the Basics: Advanced Strategies for Tech Companies

#9. Integrate with Existing Partner Ecosystems

Many tech companies operate within larger ecosystems with established partner networks. Explore opportunities to integrate your program with these existing ecosystems, leveraging the extensive reach and expertise of pre-vetted partners.

Streamlining integration is crucial. Work with ecosystem leaders to standardise protocols for partner onboarding. This might involve aligning data formats for smooth information exchange, creating a unified onboarding process that minimises redundancy, and establishing clear communication channels between all parties involved in the ecosystem. This ensures a smooth transition for partners joining your program through the existing network.

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#10. Continuously Monitor and Refine Your Program

Building successful Channel Partner Programs is not a destination, but rather a continuous journey. Regularly evaluate your program's performance based on key metrics like partner acquisition rates, sales generated through the channel, and partner satisfaction levels. It’s important to utilise this data to identify areas for improvement and ensure your program remains aligned with the company's goals. 

Here are some of the key metrics to gauge your program's effectiveness and identify areas for improvement:

Revenue:

• Sales generated through partners
• Partner profitability: analyses profitability of partner relationships
• Average revenue per partner (ARPP) 

Engagement and Activity:

• Number of active partners
• Partner deal registration rate
• Partner marketing campaign participation

Customer Acquisition and Retention:

• Customer acquisition cost (CAC) through partners
• Customer lifetime value (CLTV) attributed to partners
• Customer satisfaction with partner interactions